Jeff wants to learn more about investing in opportunity-zones and decides to reach out to his CPA Carly!
Carly explains that opportunity-zones are designed by the tax cuts and job act to encourage investment into economically distressed and low-income areas through capital gains incentives!!
She explains that investors can defer capitalgains tax from any investment if it is reinvested into an opportunity-zone property! Those capital gains are not taxed until the end of 2026 or when the asset is disposed of.
Carly explains that if an investor holds onto an opportunity-zone property for 5 years, the taxable gain reduces by 10%. If it is held for 7 years the taxable gain reduces by 15%. For example if you received $50,000 in gains only $45,000 is taxable if held for 5 years and only $42,500 Is taxable if held for 7 years.
Carly says another tax benefit to opportunities-zones is tax deferral on a properties appreciation.
if an investor invested $100,000 into an opportunity-zone project and held it a minimum of 10yrs and is eventually sold for $300,000 due to appreciation, that investor would pay zero taxes on the 200,000 gain!!
Keep in mind, there are certain rules to follow in order for the project to qualify with the IRS – so be sure to speak to your professional!
Jeff now fully understands opportunity-zones and the great advantages they provide to investors AND lower-income areas!